Trudi asked below question about CIF Terms and who is responsible to off-load cargo from the ship – seller or buyer..??
I have a CIF shipment to Dar es Salaam. The port cranes in Dar es Salaam can not handle the tonnage of the item we are sending. Who is responsible to hire and pay a portable crane to off load the cargo in Dar es Salaam – the buyer or the seller.
Trudi – Incoterms® 2010 defines CIF as below :
CIF – Cost, Insurance, and Freight
“Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered.
The risk of loss of or damage to the goods passes when the goods are on board the vessel.
The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.
‘The seller also contracts for insurance cover against the buyer’s risk of loss of or damage to the goods during the carriage.
The buyer should note that under CIF the seller is required to obtain insurance only on minimum cover.
Should the buyer wish to have more insurance protection, it will need either to agree as much expressly with the seller or to make its own extra insurance arrangements.”
The cargo becomes the buyer’s property from the moment the cargo passes over the ships rail at the port of shipment is loaded on board the ship.. Since it is his cargo, the BUYER is obligated to do what is required to off-load his cargo..
The BUYER is responsible to hire and pay for all costs associated with off-loading the cargo at Dar es Salaam.. From an insurance and risk perspective, it is always prudent to clearly show the actual place of insured destination in the sales contract, commercial invoice, L/C and any other relevant documents..
who is responsible to pay the claim?
– seller has issued invoice at CIF and provide copy of an insurance policy (Company in China) from a Chinese port to an Egyptian port
– buyer has made a wide insurance coverage ICCA from warehouse to warehouse (insurance company in Egypt)
– goods are delivered in at port of destination with the same number of coils but with different in weight (shortage in weight about 50%), labels deliberated, cut at edges of some coils.
who is liable about such shortage? supplier, the Chinese insurance company or the egyptian insurance company?
Here we have what is known as double insurance. Two insurance policies covering the same risks even though the extent of cover may differ. Full investigation needs to be made as to the condition of the cargo at the time of loading at the port of load. Once the investigation has been completed it can be established where the damage occurred. This will assist as to the liable party. If it is an insurance claim, submit to the Egyptian insurer and after they have paid they will claim against the Chinese insurer for their ratable proportion of the loss.
However, it does appear from the information given that the coils may have had shortages at the time of loading at the the port of shipment and thus the seller short supplied making the seller liable. Are there any photos of the cargo taken at the time of loading? It is very difficult to give an accurate answer without more information and investigation.
Can the carrier claim outstanding freight, demurrage(due to delay in discharge port) from the BL holder under the CIF contract? If the charterer has no money basis, the BL having a clause “all terms as per charter.”
There should be no freight outstanding as under CIF freight is prepaid. However, the buyer is responsible for discharge costs. The buyer should have been aware of the mass of the cargo expected and ensured that there was the necessary equipment to facilitate its discharge.
The ship can claim any costs from the buyer due to the delay in discharging the cargo which is due entirely to the fact of correct equipment not being available.
Hi, I want to know the scope of demurrage charges paid by buyer at destination port against CIF consignment due to delay in submission of LC Document by Seller to the bank due to COVID-19 (suspension of Courier Services). Consignment has came from China to India.
UNder CIF terms whose responsible for detention /storage charges..
is it linked with document delivery.
Hi,
The Buyer is responsible for storage and detention charges at destination port.
Hariesh, the question about who pays for the discharging costs under CIF (or CFR) has not that straight answer moreover when the Incoterms 2010 address the risk passage and in any case are addressing the title passage. Those subjects (title and other costs in the grey area)should be addressed in the sales contract. Indeed to avoid endless discussions between sellers and buyers the best suggested practice should be declaring the Incoterm 2010(r) CIF …place … “Free Out terms for the shipping contract” if intention is to not put the discharging costs on the Seller but on the Buyer and vice-versa CIF “Liner Out Terms for the shipping contract” if the buyer wants to assume discharging costs.
Hi Juan, we now have Incoterms 2020 rules. According to the ICC publication the costs of discharging is for the account of the buyer unless the contract of affreightment dictates that the seller shall be responsible. This is mentioned under A9 and B9 obligations. Under A9 c), the seller’s obligation, “any charges for unloading at the agreed port of discharge that were for the seller’s account under the contract of carriage.” The buyer’s obligation under B9 C) states “unloading costs including lighterage and wharfage charges, unless such costs and charges were for the seller’s account under the contract of carriage.”
Not sure if this assists you.
Sir – Wants to know in CIF till what point insurance is valid..Is at the destination port..Whether if any damages occurs during sea transit whether buyer have to claim in the policy taken by the seller..
It depends on the contract of insurance. If it states the name of the port of discharge then the cover is only until the cargo is discharged. It can be up to the buyer’s premises but this needs to be made clear to the seller on the end point of cover required and that must be stated in the certificate. When the seller takes out the insurance on behalf of the buyer, the seller must endorse the certificate into the name of the buyer to enable the buyer to claim against the policy issued. All contact details of the representative of the insurer at the destination will be on the certificate.
what is the role of shipping agent and the Cargo agent. and who has the authority to issue DO (delivery order) to the consignee. is that a duty of shipping agent or Cargo agent
Hi, Trudi is correct in that the buyer is responsible for the unloading of the cargo. The cargo is under the risk of the buyer from the time loaded on board. The seller must just get the cargo to the named port of discharge. All subsequent costs are for the buyer.
There was a consignment exported with CIF freeout destination port mentioned on invoice. Please advise if free out has any significance related to insurance?
Where does the cover terminated if seller has taken a policy with ICCA 2009.
Good question from Zuzana. Additional question: are the goods covered during the time at container yard at destination port?
Hello,
Do I understand it right, that when incoterms are CIF Durban, that the cargo is insured only up to the port in Durban (on vessel), but the unloading and the delivery to the consignee is not insured?
Thank you!
good question. I also would like to know if the containers are still covered by the seller’s insurance during the time when containers are in the container yard under CIF Durban. Thank you!
SIR, WE ARE BUYING HAZ CARGO , SHIPPER INSISTS ON FOB WITH TERMS WHEREAS WE ARE ASKING HIM TO MAKE IT CFR . WITH WHOM THE RESPONSIBILITY OF THE CARGO LAY IN CASE THE GOODS ARE DAMAGED ON REACHING DESTINATION PORT??
Thank you again All for the comments – it has been most helpful. I have learned a lot.
Have a awesome day.
great comments, and helpfull, even for an employee in this business!
where were you, no, correction, why haven’t I found you earlier?
Kind regards!
Hi Trudi
Expensive it is (most unfortunately)
Suggest you negotiate further / look for alternatives although there are limited BB opportunities to DAR
Best wishes
Hi Clive
The cargo is not loaded yet – the cargo is still in the manufacturing process but it is my responsibility to get it in Dar. The quote I have is for vessels with its own cranes and it is very expensive. This is causing the seller to fork out high freight rates for something that is not really their problem.
When a company quotes, particularly on CIF as in this case, a company should have all their figures available to include them in the selling price, as ultimately it is the buyer who is paying. Is the seller having to charter a ship to get the cargo to destination? If not, all the seller has to do is load the cargo onto the ship where his risk ends but his responsibility will be to ensure the cargo gets to the port of destination, pay for the ocean freight to get it there plus the insurance based on a value of CIF plus 10% on conditions ICC “C”. The buyer can request better terms of insurance as the cost will be for his account as all charges will be built into the final selling cost and invoiced to the buyer.
Hi Trudi
Just curious
Was your cargo loaded by Ships Crane or Mobile Crane or Floating Crane and
at which berth Point / Maydon Wharf ?
Alex, the liner terms of which you speak are in respect of charter parties, and not normal break bulk cargo. Have a look at my previous comment as well as that of David D Murray. David is a very well versed person in the Incoterms ® rules and comments often in the http://www.linkedin.com website on Incoterms rules and their interpretation. Please also note that the Incoterms ® rules has nothing to do with ownership, but everything about risk in the cargo.
Fully agree to comments but most importantly to what Alex says. WHAT are the terms of shipment FLT / FIOS / FILO / LIFO ??? How did cargo get loaded onto vessel if it cannot be discharged . Perhaps it is here that we should look for answers.
This is what makes it the most interesting and educational shipping blog
Thanks again
Morning All – the cargo is loaded in Durban and Durban port cranes can handle the tonnage but Dar es Salaam’s cranes cant – the port cranes in Dar can handle up to 35 tons and my cargo is 83 tons. Dar does have protable cranes but it needs to be hired in – that is where the questions comes in who is responsible for the off loading.
Thank you all for your comments, it is really helpfull.
Thank you – this is an awesome site – extremely helpful
Whenever looking at the Incoterms rules, it is of vital importance to consider whether it is the 2000 or 2010 version. With the 2000 version, risk passes when the cargo passes the ship’s rail, with the 2010 rules, risk passes when the cargo is stowed and secured on board the ship. Incoterms has nothing to do with ownership. Ownership passes when the item is paid for. Whether it is the 2000 or 2010 rules, it is always the duty of the buyer under Incoterms ® 2010 rules CIF to pay for the discharge of the cargo. The seller has the cost and responsibility of getting the cargo to the named port, still loaded.
The concept of “the ship’s rail” was eliminated from the Incoterms® rules. The Guidance note to Incoterms® rule CIF says, “”Cost, Insurance and Freight” means that the seller delivers the goods on board the vessel or procures the goods already so delivered. The risk of loss of or damage to the goods passes when the goods are on board the vessel. The seller must contract for and pay the costs and freight necessary to bring the goods to the named port of destination.” It says nothing about a “ship’s rail” and if you read the entire Incoterms 2010, you will find there is no mention of the “ship’s rail”.
Hariesh: it is required to examine the liner term agreed between the seller and the shipping company as to make sure who is responsible for cargo handling. In many cases, the buyer cannot handle the cargo whatsoever.
Neither will the seller handle the offloading., The shipping line will be responsible for loading a cargo on board with the facility to offload at the port of destination.The buyer and the seller have to rise and partner togetther for shipping line to offload. moreover its not their vessel. and the terms of shipment must be interpreted.